Selloff Pain. Strong USD. Crude Bottoms Gold Hugs $1200. Nat Gas Rips
Bill Baruch, president and founder of Blue Line Futures, previews E-mini S&P, Gold, Crude, Forex and Treasury markets and today’s economic report calendar. Follow his reports Monday-Friday on MoneyShow.com and short Midday Markets video.
E-mini S&P (December)
Yesterday’s close: Settled at 2727.75, down, down 51.25.
Fundamentals: U.S. benchmarks are paring the worst of yesterday’s selloff. U.S. dollar strength, emerging markets pain, deadlock in Europe and trade headwinds have all weighed on the tape to start the week; the S&P (SPX) lost 1.8% and the NQ (NDX) 2.8%.
There are reports that Treasury Secretary Mnuchin and China’s Vice Premier Liu spoke Friday for the first time and months and the latter is preparing to visit Washington in the coming days. This has lifted global sentiment and while encouraging a consolidation ahead of the EU’s deadline for Italy to resubmit their budget plan.
Also, the British pound (GPB) has regained a penny on Brexit optimism, despite an underwhelming employment report this morning. Traders must keep an ear to the ground for news on both, the negotiations in Europe and those on U.S and China trade.
Retail earnings hit the tape this week and Home Depot (HD) started things off on a positive note topping analysts’ estimates, the stock is up 1.5% premarket. Walmart (WMT), the world’s largest retailer, reports tomorrow before the bell.
The economic calendar doesn’t pick up until a crucial read on CPI tomorrow. However, we have a deluge of Fed speak starting today. Fed Governor Brainard (permanent voter) and Minneapolis Fed President Kashkari both speak at 10:00 am EDT. Philadelphia Fed President Harker speaks at 2:20 pm EDT and San Francisco Fed President Daly, a voting member in December, speaks at 5:00 pm. Tonight, we look to the trio of Industrial Production, Fixed Asset Investment and Retail Sales data from China at 9:00 pm EDT. Tomorrow, Fed Chair Powell and Fed Governor Quarles both speak.
Technicals: Monday, we introduced a minor Bearish Bias citing that we will hold such until the market moves out above and holds above 2783.50, today this level now comes in at ...
Crude Oil (December)
Monday’s close: Settled at 59.93, down 0.26.
Fundamentals: Crude Oil had struggled to hold overnight gains through yesterday’s session before President Trump directed a tweet at OPEC saying, “Hopefully, Saudi Arabia and OPEC will not be cutting oil production. Oil prices should be much lower based on supply!” His comments snowballed the market to new lows and the tape reached 58.24 overnight, the lowest since February.
OPEC released their monthly report this morning, however, it was overshadowed by their potential supply cut discussed over the weekend and the IEA’s annual World Energy Outlook which focused on a longer-term shortage. First, OPEC highlighted widening supply versus demand, an already known factor. The IEA is singing a different tune and firmly stated that U.S shale must continue to increase production and match that of Russia in order to avoid a severe supply shortage within seven years. However, commenting on the near-term, IEA’s Executive Director Birol confirmed that it is necessary to cut production now to stabilize the market. The IEA’s Monthly Report is due out tomorrow.
If you are looking a bottoming signal, a major component must be a weekly draw in Crude Oil; the streak of seven straight weeks of builds must end. This week’s EIA data will be on Thursday, but inventory expectations will begin trickling out today.
Technicals: Friday and yesterday, we were steadfast in saying that a bottoming process was now underway. Although this did not necessarily mean a low was in, yesterday’s price action was not what we would have imagined seeing in order to confirm that such a process was underway. However, our rare major four-star support does come in at ...
Gold (December)
Monday’s close: Settled at 1203.5, down 5.1.
Fundamentals: Gold is hugging the psychological $1200 mark but is seeing a light at the end of the tunnel through technicals and a reprieve in the dollar’s strength. Still, today’s budget showdown between the EU and Italy will play a critical role in the tape. Furthermore, the next three days will bring a deluge of Fed speak. Fed Governor Brainard (permanent voter) and Minneapolis Fed President Kashkari both speak at 10:00 am CT. Philadelphia Fed President Harker speaks at 2:20 pm EDT and San Francisco Fed President Daly, a voting member in December, speaks at 5:00 pm. Tomorrow and Thursday, both Fed Chair Powell and Fed Governor Quarles speak each day. Coming on the heels of PPI’s hot read and inflation around the world trying to poke its head, all eyes must be on CPI tomorrow morning. These next three days will be a fundamental battleground for Gold.
Technicals: Gold traded to a low of 1196.6 and this is crucial because ...
Natural Gas (December)
Monday’s close: Settled at 3.788, up 0.069.
Fundamentals: Natural Gas crossed the elusive $4 level for the first time since the week of December 2014. This accelerated rip higher has been months in the making and temperatures hitting freezing levels in the first week of November was the straw that broke the camel’s back.
While storage levels have been below the 5-year average for the entire year, they also moved below the 5-year range this summer. In other words, the table has been set for months. Remember, at the start of the year, the U.S. became a net exporter of Natural Gas and this coincides with the trend in storage. At these levels, traders do not want to chase this move, but ultimately, this could be the start of a new longer-term bullish trend in prices and pullbacks should bring buying opportunities.
Technicals: After ripping higher last Monday, Natural Gas quickly formed a bull-flag pattern before breaking out on Friday. Last night’s high of 4.067 was a test to long-term ...
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View a short video: Bill Baruch: Trading Futures. Gold, USD, yuan.
Recorded: TradersExpo Chicago July 24, 2018.
Duration: 4:34.
